Systematic Investing

Systematic approaches in fixed income are getting attention, and much like the technology disruption over the past decade, a thematic shift in investment process is emerging. Fixed income overall has had the longest period of declining real yields in uninspired growth conditions. Aggressive fiscal and monetary policy, supported through asset purchase programmes by central banks, will undoubtedly influence how long these effects will last for. Therefore, it is no real surprise that low yields and muted long-term return expectations from fixed income (see Figure 1) have influenced investors to re-evaluate the value-add that the asset class provides after fees. In other words, does the current approach to fixed income create value over the long term?

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